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The Sources and Dynamics of Inflation in Indonesia: An ECM Model Estimation for 1952-2002

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  • Hossain, A.

Abstract

This study analyses inflation, money supply and output growth in Indonesia during 1950-2002. We develop a monetary model of inflation and uses it as a theoretical basis for this study, by the estimation of the cointegration-and error-correction models of inflation.

Suggested Citation

  • Hossain, A., 2005. "The Sources and Dynamics of Inflation in Indonesia: An ECM Model Estimation for 1952-2002," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 5(4).
    • Handle: RePEc:eaa:aeinde:v:5:y:2005:i:4_6
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    References listed on IDEAS

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    1. Sargan, John Denis & Bhargava, Alok, 1983. "Testing Residuals from Least Squares Regression for Being Generated by the Gaussian Random Walk," Econometrica, Econometric Society, vol. 51(1), pages 153-174, January.
    2. International Monetary Fund, 2002. "Indonesia: Selected Issues," IMF Staff Country Reports 2002/154, International Monetary Fund.
    3. Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," NBER Chapters, in: The Demand for Money: Some Theoretical and Empirical Results, pages 1-29, National Bureau of Economic Research, Inc.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    5. Corden, W Max, 1993. "Exchange Rate Policies for Developing Countries," Economic Journal, Royal Economic Society, vol. 103(416), pages 198-207, January.
    6. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    7. André Sapir & Jaime de Melo, 1991. "Trade theory and economic reform: North, South and East," ULB Institutional Repository 2013/8084, ULB -- Universite Libre de Bruxelles.
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    Cited by:

    1. William MILES, 2011. "Financial Globalization And Inflation In Developing Countries: A Reappraisal," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(1).
    2. Jaka Sriyana & Jiyao Joanna Ge, 2019. "Asymmetric responses of fiscal policy to the inflation rate in Indonesia," Economics Bulletin, AccessEcon, vol. 39(3), pages 1701-1713.
    3. Jaka Sriyana, 2018. "Inflationary effects of fiscal and monetary policies in Indonesia," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 674-688, June.

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    More about this item

    Keywords

    Money Supply; Inflation; Indonesia; ECM; Error Correction Models;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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